Judge Strikes Parts of Missouri Campaign Finance Law

(CN) – A federal judge overturned portions of Missouri’s new campaign finance law, including bans on heavily regulated industries contributing to political action committees and contributions between PACs.

Free and Fair Election Fund and Missouri Electric Cooperatives sued Missouri and the state ethics commission, the entity in charge of enforcing campaign finance laws, last year in Western Missouri federal court.

The lawsuit was in response to an amendment of Article VIII of the Missouri Constitution that added Section 23. On Nov. 8, 70 percent of Missouri voters approved Initiative Petition 2016-007 that added Section 23, changing multiple campaign finance regulations.

The amendment limited individual campaign contributions to candidates to $2,600 per election, prohibited candidate committees from contributing to another candidate committee, and prevented certain corporations and unions from contributing to campaign committees, except contributions made through an established “continuing committee.”

On Friday, Senior U.S. District Judge Ortrie Smith ruled that the $2,600 limit can stay in place, but the other regulations must go.

Smith found the ban on contributions made to Missouri political action committees, or PACs, by foreign businesses not authorized to do business in Missouri to be unconstitutional, as well as a prohibition on contributions from “heavily regulated industries.”

Free and Fair Election Fund and Missouri Electric Cooperatives argued that the ban was not narrowly tailored to the state’s interest in maintaining fair elections. Judge Smith agreed.

“Defendants have not demonstrated Section 23.3(12)’s ban on PAC contributions by either state-chartered banks or rural electric cooperatives is closely drawn to the government’s interests,” he wrote. “Defendants indicated they developed a list of heavily regulated industries by researching the chapters under which the business is formed and examining the regulations imposed on the business or industry, but the Court can find little commonality among these businesses other than being organized outside title XXIII of the Missouri Revised Statutes.”

As justification for the ban, Missouri and its ethics commission cited “a particular danger of corruption or the appearance of corruption because these businesses are heavily regulated by the legislators to whom they wish to contribute.”

“However, Section 23.3(12) is a ban on PAC contributions as opposed to contributions to candidates, and ‘there is not the same risk of quid pro quo corruption or its appearance when money flows through independent actors to a candidate, as when a donor contributes to a candidate directly,’” Smith wrote, citing the U.S. Supreme Court’s 2014 ruling in McCutcheon v. FEC.

Smith also found the ban on PAC-to-PAC contributions to be unconstitutional.

“While evasion of campaign finance limits is an important interest, Section 23.3(12)’s absolute prohibition on PAC to PAC transfers is not closely drawn to serve this interest,” the judge wrote.

The state had argued this ban was necessary to prevent corruption or the appearance of corruption, promote transparency in the flow of money, and prevent circumvention of Section 23’s other restrictions, according to court records.

Under Missouri law, a PAC is an independent actor. Again citing McCutcheon, Smith concluded that Missouri and its election commission “do not have a valid interest in preventing corruption or the appearance thereof by regulating PAC to PAC transfers by imposing an absolute ban as Section 23.3(12) does.”

However, the judge upheld the $2,600 limit for individual contributions to candidates per election, citing a Missouri Ethics Commission advisory opinion clarifying that the limit will not apply to PAC contributions “unless the contribution is specifically designated for an individual candidate.”

Smith stayed the enforcement of his order for 45 days.

Loree Anne Paradise, deputy chief of staff for the Missouri attorney general’s office, said “we are carefully reviewing the court’s decision” but did not prove further comment.